BERLIN/FRANKFURT ¨C Volkswagen boss Oliver Blume, already battling slowing demand for electric cars and Chinese rivals, must now put aside his mantle as team player to tackle yet another tough opponent: Germany¡¯s powerful labor unions.
The pressure on Europe¡¯s top carmaker was laid bare this week when Volkswagen disclosed it was not only planning to scrap a 30-year old job security plan, but weighing the closure of plants in Germany.
Moritz Kronenberger, portfolio manager at Volkswagen shareholder Union Investment, dubs these the company¡¯s ¡°two holy cows.¡±
By taking them on, Blume sets a collision course with one of Germany¡¯s mightiest stakeholder groups, the IG Metall union, whose main goal is to protect jobs and sites and safeguard the favorable working conditions in Europe¡¯s biggest economy.
VW works council head Daniela Cavallo said unions would ¡°fiercely resist¡± the plans, ruling out any factory closures on her watch.
She said a staff meeting on Wednesday, where management will face workers, would be ¡°very uncomfortable.¡±
Volkswagen has not closed a plant since 1988, when it shut its Westmoreland site in Pennsylvania.
In July, it said it might close an Audi factory in Brussels, citing a sharp drop in demand for high-end electric cars.
The problem: German industry is falling further behind global competition due to high energy and labor costs, forcing some of its most storied companies, including Thyssenkrupp, to review deals with workers long seen as sacrosanct.
Investors are taking note, with Volkswagen shares down by almost a third over the past five years, making it the worst performer among major European carmakers.
The problem for Blume, 56, and the reason he has little choice other than to square off with IG Metall, is how thinly spread the sprawling VW Group has become amid growing competition, most notably from China.
It is behind schedule on a €10 billion ($11 billion) cost-cutting program at its namesake brand while needing to fund critical international projects, including a potential $5 billion investment in U.S. EV maker Rivian and a partnership with China¡¯s Xpeng.
¡°If more investments, such as in Rivian and XPeng, want to be achieved, those savings need to come from somewhere, and it appears underutilized plants are no longer a taboo, marking a massive cultural change,¡± said Matthias Schmidt, a European auto markets analyst.
¡°Decades of CEOs who wanted to do something similar ... will feel vindicated if Blume can make the move stick.¡±
Former Volkswagen bosses, including Herbert Diess and Bernd Pischetsrieder, failed in their attempts to make far-reaching changes to the Wolfsburg-based carmaker as the unions stood firm.
Blume, who took over as CEO of the group in 2022, has maintained good relations with the unions as well as with...
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